The Brexit transition deal debate is an exercise in futility

On almost every day since Theresa May went on holiday in late July, the British public has been treated to the contradictory and often self-contradictory thoughts of various ministers about the desirability, inevitability or unacceptability of a “transition” period after the United Kingdom leaves the European Union. Apart from its very public and divisive nature, this debate has been remarkable in a number of respects, writes Brendan Donnelly (Federal Trust).

It is bizarre that the Brexit transition deal debate, which is a fundamental discussion within government, is only now taking place, more than a year after the EU referendum; the terms of the debate have remained notably confused and ill-defined; the controversy has been pursued with an insular indifference towards the views of the other members of the EU, and it is unclear towards what final goal this period of transition should serve as a preparation. This whole strange episode, which now appears to have run its course in time for the Prime Minister’s return, has reflected many of the underlying incoherent self-deceptions of the Brexit project.

This strange episode has reflected many of the underlying incoherent self-deceptions of the Brexit project

The year-long reluctance of the British government seriously to consider the need for transitional arrangements of one kind or another sprang from two fundamental misconceptions. First, it believed that it could persuade its European partners to agree within two years of the Article 50 notification not merely the immediate changes relating to British EU withdrawal but the entire structure of the UK’s future economic relationship with the Union as well. Liam Fox was particularly given to forecasting swift and simple progress on this issue. Second, David Davis and his colleagues had persuaded themselves that when the UK left the everyday economic activities of British exporters and importers would be minimally affected. In its own interest, the EU would do everything it could to maintain as far as possible existing economic and trading relations with the UK. The ‘tottering’ economies of North Western Europe, on this often hubristic analysis, simply could not afford to be deprived of unrestricted access to the British market for their exports of cars, prosecco and cheese.

The dawning realisation that these blithe assumptions were fundamentally flawed is essentially what has given rise to the recent frenzied discussion about a “transition period.” It will be politically and administratively impossible to negotiate and ratify by March 2019 a comprehensive agreement regulating the future economic and political relationship between the UK and the EU. The EU would certainly prefer to minimise the disruption caused by British withdrawal from the single market and the customs union. But it will insist adamantly that the new relationship should be distinctly and demonstrably different to the status quo. There must be no “cherry-picking” and no continued British enjoyment of the benefits of membership without its accompanying obligations. It had until recently been the unspoken assumption of British ministers that clever negotiating on their part might well enable them to leave the EU in March 2019 with an overall agreement in place. This agreement would allow the UK to retain undisturbed most of its trading cake with the Union without having to swallow free movement or the continued jurisdiction of the ECJ. The abandonment of this chimera has been the insight which has triggered this summer’s confused ministerial discussion.

There must be no “cherry-picking” and no continued British enjoyment of the benefits of membership without its accompanying obligations.

Change and no change

To her credit, in recent months May had on several occasions spoken of the possibility of an “implementation period” after the UK left. In this she was more realistic than some of her Ministers. This concept of an “implementation period” seemed however to be based on the now discarded hypothesis of a Brexit negotiation concluded in March 2019, ushering in a phased progress over a limited number of years towards the new definitive trading relationship. The phraseology of an “implementation period” has therefore more recently been abandoned (no doubt to resurface later) and the dispute between ministers has revolved around the issue of a “transition period.” This phrase has manifestly meant different things to different speakers. At one stage it appeared that this might involve British membership of the European Economic Area; at another an arrangement for the UK similar to, but not identical with membership of the EEA; at yet another an unspecified bespoke arrangement for the UK that might or might not involve its remaining for some years in the single market and/or customs union; this “transition” might have lasted many years, very few years or an indeterminate number of years. The concept of a “transitional period” was publicly attacked by some ardent Leave supporters as an attempt to sabotage the Brexit process. It was lauded by William Hague as a necessary condition for making Brexit work. A final shift of the kaleidoscope has seen Philip Hammond and Liam Fox contribute a joint article to the Daily Telegraph setting out their joint view of the “transitional period.” This apparently means the UK definitively leaving the single market and customs union in March 2019 but then entering upon a “time-limited interim period” during which British businesses will be able to trade and to hire workers within the European market on a similar basis to now. Everything will therefore change and everything will remain the same. It remains to be seen how our European partners will react to this latest metaphysical whimsy from across the Channel.

Everything will therefore change and everything will remain the same. It remains to be seen how our European partners will react to this.

It has indeed been striking how little interest has been demonstrated by British Ministers and other politicians in the likely views of other Europeans regarding implementation, transitional or interim periods for Brexit. Each of these concepts represents a network of overlapping challenges for our partners, which they are unlikely to regard in the same light as do British Conservative politicians. If the UK were to ask for an extension of the two year period for negotiations before leaving the EU, it might well be possible to secure one. Any request from the British side to do so seems however to be excluded by the latest article of Messrs. Fox and Hammond. Equally, it might also be relatively easy to secure an EEA-style arrangement for the UK in the immediate aftermath of leaving, and this would be a transitional arrangement that would certainly reduce for all involved the economic mayhem of Brexit. It is however doubtful whether Liam Fox in particular could ever accept such an arrangement. Anything beyond the EEA or a near equivalent is however likely to prove an unattractive prospect to our partners. They will be particularly reluctant to endorse any transitional arrangement that appears to reward the UK, even temporarily, for its decision to leave. It is an illuminating commentary on contrasting attitudes to be found in the UK and elsewhere in Europe that this reluctance will be seen by many Conservative politicians as simple vindictiveness. When the UK vigorously pursues its own perceived interests, that is standardly seen in this country as patriotic self-assertion. When the EU pursues its own interests wholly different considerations appear to apply. With the possible exception of the current right-wing Polish government, all EU member states regard it as being in their high national interest that the EU should maintain its solidarity towards the outside world, of which the UK now wishes to form part. It was always naively optimistic of some British politicians to believe otherwise.

Quo vadis?

Even if the EU were more prepared to help the British government out of its largely self-generated difficulties, one fundamental question remains unresolved: what is the final destination towards which a transitional arrangement is conceived as a path. This summer’s debates have provided no clarity on that issue and indeed it is impossible that they should do so. Most of those who voted for Brexit last year did so in the belief that it would be possible to restructure in a more favourable way the balance of rights and obligations in the UK’s economic relationship with the EU. No such offer is or ever will be in prospect. Within the Conservative Party, there are those such as Philip Hammond who recognise this reality and seek to mitigate the damage which Brexit will inevitably cause. Others, such as Liam Fox, continue to believe in the unvarnished Brexit prospectus, in which leaving the EU is of itself such an economic and political prize that it must never be put in question by issues of mere short-term economic management. As long as the British government and the Conservative Party are divided in this fashion, it will be impossible for any coherent long-term approach to Brexit to emerge. In their joint article last weekend, Hammond and Fox have claimed to be seeking an interim arrangement to soften the effect of Brexit. It is almost inconceivable that these two ministers could agree on terms of this interim arrangement that would be acceptable to our partners. The brand-new British proposal for a customs union which is not a customs union vividly illustrates this difficulty. Nor is there any reason to believe that our EU partners will be willing even to discuss interim arrangements for the longer term before the pressing issues of the Brexit “divorce” terms have been settled. These seem as far from resolution today as they were when the negotiations began in June.

The former Governor of the Bank of England, Mervyn King, recently spoke of the need for the British government to have a “Plan B” if its Brexit negotiations lead to no agreed outcome. This apparently reasonable remark failed to take account of the fact that leaving the EU is itself a “Plan B” reflecting the failure of “Plan A,” which was to Remain. The Conservative Party is after its summer debating school as far as ever from agreeing on what this “Plan B” should be. Against this background, the display of rhetorical unity affected by Philip Hammond and Liam Fox holds a much more important message for May than it does for Michel Barnier. For many years the Conservative approach to the great national question of Europe has been inextricably intermingled with its own internal feuds, rivalries and personal ambitions. The Fox/Hammond Pact is an obvious scene-setter for the Party’s next act of self-laceration, with May as its principal victim.

An earlier version of this post appeared on The Federal Trust and it represents the views of the author and not those of the Brexit blog, nor the LSE.

Brendan Donnelly has been Director of the Federal Trust since January 2003 and is a Senior Research Fellow at the Global Policy Institute. He is a former Member of the European Parliament (1994 to 1999).

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6 Comments

The UK is not asking to have its cake and leave it. It is asking for a free trade agreement similar to that which exists already between Canada and the EU or possibly a UK-EU customs union similar to that which exists already between Turkey and the EU. Neither of those existing arrangements include freedom of movement and the Canada-EU agreement does not grant the ECJ power in canada. Pro-EU commentators seem remarkably deaf to the repeated speeches, position papers and the Article 50 letter in which this UK position has been consistently articulated. The claim that the UK is cherry-picking appears to be based on the wishful thinking of Remoaners that the UK will stay in the EU or its single market on current terms including acceptance of EU demands on freedom of movement, ECJ jurisdiction but this has been clearly ruled out by the UK government in every occasion. A hearing aid would not even help those still complaining about having cake and eating it because there are none so deaf as those who will not listen to what they consider an affront to their broken-down world view.

The UK is most definitely not asking for a replication of the Canada/EU CETA deal. The CETA specifically doesn’t cover services. A deal like CETA would damage UK pharmaceuticals. finance, data etc by removing them from the EEA. 80% of the UK’s exports to the EU are services so this really matters. You might like to ask yourself why Canadian banks aren’t allowed to sell pensions in the EU? Well, it’s because they’re not in the EEA and do not have permission to operate there.

The UK is asking for the treaties that govern the UK’s relationship with the EU to be rewritten as a free trade agreement to the extent that its current relationship is approximately replicated. The degree of approximation is still not decided, which is a bit of a worry. It will be by far the most complex FTA ever attempted anywhere in the history of global trade. Just to make it that bit harder, the UK can’t actually decide exactly (or even approximately) what it wants.

On current rates of progress, it is likely that the UK will leave the EU without even coming to an agreement with itself about what it wants. We’ll be hammering at this nail for years and years and years.

The previous poster seems every bit as deaf a Brexiteer as he accuses Remainers of being. He seems to think that negotiating with the remaining 27 EU countries will be a walkover. He should remember that the EU-Canada free trade pact was first proposed in 2009. It is only now nearing conclusion, EIGHT YEARS later.

The Government has a plan they have put it online for all to see.
The author says plan A was to remain. Well I do not see how anybody reading the Governments Plan can come to that conclusion.
Also if you read the objectives a transition period has always been in the plan. The text in the explanation also states that in the event of no deal The Government will take action to mitigate the effects.
Where I fully agree with the author is that the EU will put it’s priorities first and it will be prepared to take a hit if it can not achieve these objectives, that maybe monetary, security co-operation or in the area of political goodwill (The UK still has a voice on the world stage, UN, G7, G20 etc, that would be helpful to the EU in it’s objectives).
The EU has consistently said that the talks on the trade deal can only take place after the UK has left the EU and is a third country i.e after 29th March 2019. So the real question is when does the UK say right enough is enough it is going to be WTO so lets sort out issues like Open Skies, security co-operation, etc. The EU will still respond with “no talks until you pay us 100bill.” But at least this would focus the minds of the Country leaders as to what they want to achieve as opposed to hard border in Ireland, no tourists for Spain et al, then something may be put in place.